Why North Dakota Is Becoming a Key State in America’s Data Center Build-Out: The Secret Weapons Are Excess Natural Gas, Empty Land, and Cold Air
The AI boom needs gigawatts, acres, and a place to put the heat. North Dakota burns off a fifth of the nation’s flared gas, has eleven people per square mile, and spends half the year below freezing. It turns out that’s a business model.
By Brian French | FloridaTechnologyNews.com
Quick Answer: North Dakota is emerging as a strategic data center state because it possesses, in one place, the three inputs the AI build-out is short of everywhere else: stranded energy, empty land, and free cooling. The state produces about 3.5 billion cubic feet of natural gas per day as a byproduct of Bakken oil, still flares roughly 4–5% of it, and accounted for about a fifth of all U.S. vented and flared gas in 2024 — energy with no buyer that a data center can turn into compute. Its population density is roughly eleven people per square mile, so gigawatt-scale campuses face little of the land and neighbor friction choking projects in Virginia and Arizona, and its climate slashes cooling costs. The evidence is now on the ground: Applied Digital’s Ellendale campus (a 400 MW “AI factory” fully leased to CoreWeave under an $11 billion, 15-year deal), its $3 billion Polaris Forge 2 near Fargo (Oracle identified as lessee in SEC filings), and a proposed Polaris Forge 3 in Oliver County with a 15-year hyperscaler lease valued at $7.5 billion — plus a $500 million state commitment to the Bakken East pipeline, a 1 Bcf/d line built to move western gas to eastern power plants and data centers by 2030. Trackers count 26 North Dakota data center facilities operational, under construction, or planned. The constraint is now infrastructure timing and small-town capacity, not resources.
The Problem the AI Boom Has Everywhere Else
Every major data center market in America is running out of something. Northern Virginia is out of power and patience. Phoenix is out of water and grid headroom. Texas has the gas but is fighting over the grid. The industry’s own forecasts describe the scale: Todd Slawson, chair of the North Dakota Petroleum Foundation, put AI’s power appetite at 50 gigawatts by 2028 — “like building another California.”
The hyperscalers have responded by looking for places with three things at once: energy that’s already there and underused, land nobody will fight over, and a climate that does part of the cooling for free. Very few places have all three. North Dakota, improbably, is one of them — and the reason is the state’s oldest economic story, told backwards.
Secret Weapon One: Gas With Nowhere to Go
North Dakota didn’t set out to produce natural gas. It set out to produce oil, and the Bakken shale gives it gas whether it wants it or not — “associated gas” that comes up alongside the crude. State production averaged 3.52 billion cubic feet per day in mid-2025, and the gas-to-oil ratio keeps climbing as the field ages. For most of the shale era, the state couldn’t move it: gross gas production rose more than 800% between 2010 and 2019, and in 2019 the state flared 19% of it — burned it off at the wellhead for lack of pipelines and processing.
A decade of capture rules and midstream investment brought the flaring rate down to the 4–5% range today. But the arithmetic is still enormous. The U.S. Energy Information Administration counts about 67,700 million cubic feet vented and flared in North Dakota in 2024 — roughly a fifth of the national total. And the underlying dilemma hasn’t gone away; it’s gotten sharper. As Justin Kringstad, executive director of the North Dakota Pipeline Authority, put it at the 2026 Williston Basin Petroleum Conference: producers will not allow flaring to ramp back up, and if the state can’t give the gas an outlet, they’ll move their capital elsewhere.
Enter the data center, which is — from a gas producer’s point of view — the perfect customer: a buyer of round-the-clock electricity that can be built next to generation, doesn’t care about the pipeline to Chicago, and turns a waste stream into the most valuable product in the world economy. Applied Digital has signed with Babcock & Wilcox for more than a gigawatt of natural gas power. The Intensity intrastate pipeline advanced its first phase on precedent agreements with the Rainbow Energy Center. And in April 2026 the North Dakota Industrial Commission voted unanimously to commit up to $500 million to WBI Energy’s Bakken East pipeline — a 1 Bcf/d line from McKenzie County to Fargo, phase one to Bismarck by November 2029 and the full route by late 2030 — with the state itself stepping in as a shipper to underwrite the risk. The stated purpose, in WBI’s own words: power generation and potential data center operations in the east.
That’s the secret weapon in one sentence: North Dakota has energy it has been literally setting on fire, and it has decided to route it to computers instead.
Secret Weapon Two: Eleven People Per Square Mile
Ellendale, North Dakota, has about 1,100 residents. It is now home to one of the most ambitious data center developments in North America. That juxtaposition is the second weapon.
The site-selection math for a gigawatt-class campus is brutal in populated states: hundreds of acres, transmission corridors, water debates, noise, and a public that increasingly says no — South Dakota’s legislature has weighed a data center pause; Minnesota has debated bills; even in Harwood, near Fargo, residents packed forums to fight Applied Digital’s second campus over transparency and power. But in a state of roughly 800,000 people on 70,000 square miles, the opposition is thin and the land is, as Applied Digital’s Laura Laltrello described the company’s strategy, ground “that otherwise wouldn’t be consumed by anything else.” Polaris Forge 2 sits on 900 acres. Ellendale’s construction workforce has at times equaled the town’s population, and the finished campus is expected to employ 300 to 400 people — transformational for a town that had been losing residents for decades. The state’s 2025 legislative session declined to create a siting process for large power users, while raising its pipeline guarantee from $300 million to $500 million. The message to developers could not be clearer.
🎯 Brian’s Take: As a former money manager, I learned to look for the asset the market is mispricing because it’s embarrassing. North Dakota’s flare stacks were an embarrassment — a visible waste, a climate liability, a regulatory headache — and that’s exactly why they’re an opportunity. Energy that’s being burned for nothing has a marginal cost of roughly zero, and the most valuable industrial process of the decade wants nothing more than cheap, constant electricity and room to sprawl. The state figured out that the fix for its worst-looking problem was to build the thing everyone else can’t site. Florida readers should notice what we don’t have: we’re gas-poor, land-rich only where it’s wet, and hot year-round. The AI build-out is a geography auction, and the Northern Plains just discovered they’re holding cards nobody looked at.
Secret Weapon Three: Winter as Infrastructure
The third advantage is the one that costs nothing and never runs out. Cooling is among the largest operating expenses of an AI data center, and North Dakota spends much of the year cold enough to do it nearly for free. Applied Digital cites cool climate, high-density power design, and near-zero water consumption as core to its campus model; its closed-loop liquid cooling recirculates the same water continuously, and the company says the Ellendale facility will use less water than a single-family household — a sharp contrast to evaporative-cooled campuses in the Southwest that vent millions of gallons. In a Phoenix data center, the desert is the enemy. In Ellendale, the prairie winter is a subsidy.
The Proof on the Ground
North Dakota’s data center story has moved from pitch to steel. The trackers count 26 facilities — 11 operational, 3 under construction, 12 planned or approved — and the flagship developer’s portfolio reads like a case study in how fast the state’s thesis converted:
Polaris Forge 1, Ellendale. Begun in 2022 as a crypto-and-HPC site, redesigned as a 400 MW AI factory. CoreWeave signed for 250 MW in June 2025 — roughly $7 billion over 15 years — then took the entire campus under an $11 billion agreement. Building 1’s two 50 MW phases entered service in late 2025; Building 2’s first 75 MW phase was ready in July 2026. The campus is expanding toward three buildings and up to 530 MW of demand. (The company’s 180 MW ELN01 crypto-mining facility sits in the same town — the industry’s previous incarnation.)
Polaris Forge 2, Harwood. A $3 billion, 280 MW campus on 900 acres north of Fargo, groundbreaking September 2025, first phase in the second half of 2026 and full buildout by early 2027, powered through Cass County Electric Cooperative under a ~$110 million power project the state PSC approved. Applied Digital priced $2.15 billion of senior secured notes in March 2026 to fund it, and its SEC filing identifies Oracle as the lessee. About 200 permanent jobs.
Polaris Forge 3, Oliver County. Proposed with MDU Resources near Center, in coal-and-gas country: 430 MW of utility capacity for 300 MW of IT load, initial operation targeted for August 2027, and a 15-year hyperscaler lease valued at $7.5 billion over the base term — $18.2 billion if all options are exercised.
Layer on the micro data centers being tested in the oil patch itself — compute placed at the wellhead to consume gas that would otherwise flare — and the shape of the model is visible: big campuses in the east fed by pipeline, small ones in the west fed directly by the flare.
The Honest Ledger
A composite analysis owes the reader the other column. The gas is in the west and the data centers are in the east, which is why Bakken East matters — and it doesn’t fully arrive until 2030, so the near-term build runs on existing grid capacity and cooperative power, not stranded gas. The state has handed out tens of millions of dollars in sales tax exemptions on data center equipment in two years, and a legislative committee is now examining whether the incentives outrun the benefits. Small towns carry concentrated risk: Ellendale’s mayor, Don Flaherty, has said he worries about the industry “every single day,” because if the company falters, so could the town. Harwood’s fight over annexation, transparency, and power rates shows the friction rising even in a thinly populated state. And the developer at the center of the story is a single mid-cap company financing multi-billion-dollar campuses with high-yield debt against leases to neoclouds and hyperscalers whose own demand depends on the AI capex cycle holding. North Dakota has the resources. Whether it has the customers in five years is the AI industry’s question, not the state’s.
🎯 Brian’s Take: What makes this genuinely strategic rather than a one-company story is that the state acted like an investor. Underwriting $500 million of pipeline capacity as a shipper, refusing to bottleneck projects with a siting regime, exempting the equipment — that’s a government deciding which asset it wants to own and buying in before the price moves. It’s the “national champion” instinct applied at the state level, to a resource instead of a company. The bet has a clear failure mode — an AI capex slowdown that leaves a 1,100-person town with a half-built campus — but the asymmetry favors the state: the gas exists regardless, the land was empty anyway, and the pipeline serves conventional power demand even if the hyperscalers never show. Low downside, enormous upside, and a first-mover position among the northern states. If I were still running a portfolio, I’d be looking at every utility, midstream company, and cooperative between Watford City and Fargo.
Composite Data Snapshot: North Dakota’s Data Center Case
| Metric | Figure | Source |
|---|---|---|
| Natural gas production | ~3.52 Bcf/d (July 2025) | NGI / NDIC |
| Gas vented and flared, 2024 | ~67,700 MMcf — about one-fifth of U.S. total | EIA via Arbo |
| Current flaring rate | ~4–5% of associated gas | Industrial Info |
| Flaring rate, 2019 | 19% of gross production | EIA |
| Gas production growth 2010–2019 | +827% | EIA / NDIC |
| Bakken East pipeline | 1 Bcf/d, McKenzie County to Fargo; up to $500M state commitment; full route by late 2030 | ND Monitor, KFYR, WBI |
| Tracked data center facilities | 26 (11 operational, 3 under construction, 12 planned) | DCMap |
| Polaris Forge 1 (Ellendale) | 400 MW; CoreWeave $11B, 15-year lease; expanding to 530 MW | DCD, Applied Digital, SD Searchlight |
| Polaris Forge 2 (Harwood) | $3B, 280 MW, 900 acres; Oracle lessee; $2.15B notes | ENR, Server Country, DCMap |
| Polaris Forge 3 (Oliver County) | 430 MW utility / 300 MW IT; $7.5B base lease ($18.2B with options); Aug 2027 target | Server Country |
| Gas-to-power agreement | >1 GW natural gas power, Babcock & Wilcox–Applied Digital | DCD via Baxtel |
| Ellendale population | ~1,100; campus to employ 300–400 | Grand Forks Herald |
| Projected U.S. AI power need | 50 GW by 2028 | ND Petroleum Foundation via KFGO |
Frequently Asked Questions
Why is North Dakota attractive for data centers? Three converging advantages: abundant natural gas that the state has historically flared for lack of buyers, very low population density that minimizes land and siting friction, and a cold climate that cuts cooling costs — plus a state government actively underwriting pipeline infrastructure and offering equipment tax exemptions.
How much natural gas does North Dakota flare? The flaring rate is now roughly 4–5% of associated gas, down from 19% in 2019, but the volume remains large: about 67,700 MMcf vented and flared in 2024, roughly a fifth of the U.S. total, according to EIA data.
What is the Bakken East pipeline? A WBI Energy project to move 1 Bcf/d of natural gas from McKenzie County in the west to Fargo in the east, explicitly to serve power generation and data center demand. The North Dakota Industrial Commission committed up to $500 million; phase one reaches Bismarck by November 2029 and the full route by late 2030.
What data centers are in North Dakota? Trackers count 26 facilities. The largest are Applied Digital’s Polaris Forge campuses: Ellendale (400 MW, leased to CoreWeave), Harwood near Fargo (280 MW, Oracle identified as lessee), and a proposed Oliver County site (300 MW IT load, $7.5 billion hyperscaler lease).
Do North Dakota data centers use a lot of water? The flagship campuses use closed-loop liquid cooling; Applied Digital says its Ellendale facility will use less water than a single household, in contrast to evaporative-cooled facilities in hotter states.
What are the risks of North Dakota’s data center bet? Infrastructure timing (the gas is west, the demand east, and the pipeline arrives in 2030), concentrated small-town exposure to a single developer, growing scrutiny of tax exemptions, and dependence on the AI capital-expenditure cycle continuing.
Why should Florida care? Because the AI build-out is a geography auction Florida is poorly positioned to win — little gas, contested land, year-round heat — which makes North Dakota’s model a case study in which states capture the decade’s largest infrastructure investment, and a map for Florida investors of where that capital is flowing.
Sources
- Industrial Info Resources, “North Dakota’s $500 Million Pipeline Funding Paves Way for Industrial Development” (May 2, 2026). https://www.industrialinfo.com/iirenergy/industry-news/article/north-dakotas-500-million-pipeline-funding-paves-way-for-industrial-development–357127
- North Dakota Monitor, “North Dakota Industrial Commission votes to commit up to $500 million to natural gas pipeline” (Apr. 29, 2026). https://northdakotamonitor.com/2026/04/29/north-dakota-industrial-commission-votes-to-commit-up-to-500-million-to-natural-gas-pipeline/
- KFYR-TV, “A time to act: Natural gas production in the Bakken” (May 21, 2026). https://www.kfyrtv.com/2026/05/21/time-act-natural-gas-production-bakken/
- Pipeline & Gas Journal, “WBI Energy Advances Plans for Bakken East Gas Pipeline” (Nov. 10, 2025). https://pgjonline.com/news/2025/november/wbi-energy-advances-plans-for-bakken-east-gas-pipeline-to-serve-power-data-center-growth
- Arbo, “If You Burn It, Demand Will Come: Intensity and North Dakota’s Gas-to-Power Reality Check” (Mar. 9, 2026) — EIA flaring volumes. https://goarbo.com/blog/north-dakota-gas-power-reality-check/
- Natural Gas Intelligence, “Bakken Gas-to-Oil Ratios Reach New Record” (Oct. 3, 2025). https://www.naturalgasintel.com/news/bakken-gas-to-oil-ratios-reach-new-record-as-natural-gas-pipeline-projects-advance/
- U.S. Energy Information Administration, “North Dakota flared 19% of its natural gas production in 2019” (Apr. 22, 2020). https://www.eia.gov/todayinenergy/detail.php?id=43435
- U.S. Energy Information Administration, “Natural gas production in the Bakken region grew while crude oil fell in 2021” (May 16, 2022). https://www.eia.gov/todayinenergy/detail.php?id=52398
- World Bank Global Flaring & Venting Regulations, “United States: North Dakota” (Dec. 2023). https://flaringventingregulations.worldbank.org/united-states-north-dakota
- Data Center Dynamics, “Applied Digital completes first data center building at North Dakota campus” (July 27, 2026). https://www.datacenterdynamics.com/en/news/applied-digital-completes-first-data-center-building-at-north-dakota-campus/
- Applied Digital press release via Seeking Alpha, “250MW AI Data Center Lease With CoreWeave in North Dakota” (June 2, 2025). https://seekingalpha.com/pr/20122490-applied-digital-announces-250mw-ai-data-center-lease-with-coreweave-in-north-dakota
- DCMap, “North Dakota Data Center Map: 26 Facilities Tracked” (2026). https://dcmap.us/states/north-dakota/
- Server Country, “North Dakota Data Center Policy” (2026) — Polaris Forge 2 and 3 details, Oracle lessee per SEC filing. https://servercountry.org/policy/north-dakota/
- Engineering News-Record, “Construction of $3B Data Center in North Dakota Spurs Annexation Battle” (Dec. 8, 2025). https://www.enr.com/articles/62110-construction-of-3b-data-center-in-north-dakota-spurs-annexation-battle
- GovTech (TNS), “Power, Water Needs Shape $3B North Dakota Data Center” (Apr. 22, 2026). https://www.govtech.com/artificial-intelligence/power-water-needs-shape-3b-north-dakota-data-center
- South Dakota Searchlight, “North Dakota town serves as an example of the promise and perils of data centers” (Jan. 30, 2026). https://southdakotasearchlight.com/2026/01/30/north-dakota-town-serves-as-an-example-of-the-promise-and-perils-of-data-centers-for-south-dakota/
- Grand Forks Herald / InForum, “From AI data centers to natural gas, summit explores North Dakota energy scene” (Nov. 21, 2025). https://www.grandforksherald.com/business/from-ai-data-centers-to-natural-gas-summit-explores-north-dakota-energy-scene
- InForum, “Micro data centers are coming to North Dakota’s oil patch” (Nov. 21, 2025). https://www.inforum.com/news/north-dakota/micro-data-centers-are-coming-to-north-dakotas-oil-patch-what-are-they
- KFGO, “Natural gas seen as a solution to nation’s ‘power problem'” (Sept. 19, 2025). https://kfgo.com/2025/09/19/natural-gas-seen-as-a-solution-to-nations-power-problem/
- KFGO / North Dakota Monitor, “Data centers in North Dakota have received millions in sales tax breaks” (Aug. 27, 2026). https://kfgo.com/2026/08/27/1345403/
- Baxtel, “Applied Digital: Polaris Forge 1 Data Center” — Babcock & Wilcox gas-power agreement. https://baxtel.com/data-center/applied-digital-polaris-forge-1
- Brightlio, “Data Center and Colocation in North Dakota” (July 1, 2026). https://brightlio.com/data-center-and-colocation-in-north-dakota/
Population and land-area figures are U.S. Census approximations. This article is analysis, not investment advice.
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